Few bright spots in world agriculture

Press, 12 September 1986, Page 21

Few bright spots in world agriculture

By

HUGH STRINGLEMAN

The future of world agricultural trade and farmers’ prices hinges on the cereals which are in surplus in the United States and Europe, according to Mr Dick Davison, a North Canterbury farmer who is dominion junior vice-president of the meat and wool section of Federated Farmers and recently returned from a six-month Nuffield Scholarship in the United Kingdom. Europeans liked to think of a boundary around the Economic Community which would enable them to shut out the rest of the world and run their agriculture and social policy the way they wanted. “But they forget that European consumers will want the low priced cereals, meats and dairy products available right now to the rest of the world,” said Mr Davison, interviewed at his Culverden farm on his return. The United States has almost a whole harvest of grain in store and the E.E.C. has up to 20 million tonnes of wheat sitting around. “They will find that in the longer term the basic

laws of economics — supply and demand — tend to work and that you can’t protect your agriculture against world surpluses for social purposes.” But that didn’t mean that the collapse of the Common Agricultural Policy was imminent, he said, only that the strains would grow and continue forcing the E.E.C. bureaucrats and politicians to limit agricultural production and subsidies. “The oulook for cereals around the world is appalling,” said Mr Davison, “and so far there has been little or no commitment from the Europeans and the Americans to cut their production. “I would like to think that the forthcoming G.A.T.T. round focusing on agricultural trade will achieve something, but I am not hopeful.” Mr Davison said that several days spent in the European Commission headquarters in Brussels and then several months spent talking to U.K. farmers, reading newspapers and books and

meeting agricultural officials had given him some understanding of the Common Agricultural Policy and its effects. Firstly it was necessary to understand that the C.A.P. was a bit of a misnomer, in that the policy had become a social one rather than an agricultural one. Much of what went on under the policy could not be justified in agricultural terms. European cities had absorbed ' 10 million people from the surrounding countryside since World War II and with mounting population pressures and urban unemployment, the governments had to act to prop up farm prices. Also European countries were determined to be selfsufficient in as many commodities as possible. “Farmers are now living on the subsidies, and some of them not very well,” said Dick Davison. “Any moves to reduce these subsidies will send more people to the already overcrowded cities, resulting in greater unem-

ployment and civil disruption. The midlands of England, without the natural cereal growing advantages of the east of the country, would be particularly hard hit by any reductions in cereal prices. But because 80 per cent of the Community’s budget went on the C.A.P., Brussels bureaucrats were making strenuous efforts to control over-spending, over-production and the commodity stockpiles. The real prices to fanners for dairy products had been reduced about 10 per cent and real prices for cereals had also been lowered. The United Kingdom dairy farmers had overreacted to the imposition of dairy quotas by the E.C. but now that production and prices had settled down, it could be seen that farmers were not much worse off. Another Nuffield scholar this year, the West Coast Federated Farmers president, Mr Bruce Hamilton, reported recently that U.K. dairy farmers were complaining about the quotas yet Milk Marketing Board surveys

showed farmers were making more money under quota than before. That was because they had stopped feeding up to three tonnes per cow of meal as they chased production and were now concentrating on producing quota as cheaply as possible. “In a nutshell, the U.K. dairy farmer is very profitable and not too concerned about his situation," said Mr Hamilton in a report to the August meeting of his provincial executive. However, quotas had assumed an unofficial market value and were now selling at about 12 pence a litre, which added £6OO an acre to the value of dairy farm land. Mr Davison said strenuous efforts by many U.K. farmers to find diversification alternatives had not produced much action. Forestry was being talked about by many but much slower growth rates than New Zealand meant that land had to be set aside for generations, something that few farmers would do without compensation. Farm tourism was more viable because of the

large urban population and abundant overseas ■ visitors. But caravan parks and holiday camps had been overdone by many farmers who reckoned without the often bad English weather. Two broad sociological influences Mr Davison found sufficiently strong to warrant comment for New Zealand farmers were the strength of the animal welfare lobby and the trend towards vegetarianism. The welfare of animals was a very hot topic in the U.K., he said, with eggs that could claim to be “free range” (in a dirty, wet yard) bringing 50 per cent more than the battery variety. New Zealanders should not underestimate the strength of feeling in the U.K. over animal welfare and seek to capitalise on our own unspoiled and pollution-free environment. More than 20 per cent of young British women claimed to be vegetarians and the steady increase in the numbers of this group held implications for New Zealand’s future meat trade. Mr Davison was con-

vinced that the U.K. would become self-suffi-cient in sheep meats, although New Zealand could continue to sell specialised cuts and in the off-season. Mr Davison did not come back from his study tour with some good, viable production alternative for his own property, “Blackiston.” “Nothing looks very good worldwide, except for wool,” he said. "We have got to keep up the pressure on world agricultural trade barriers. “We have to keep pointing out that farm subsidies in the major economies destroy the agricultural industries of the Third World. “But it is unfair to single out Europe as the villain. “The United States is spending $25 billion a year on agricultural subsidies and still its farmers are going broke. “If New Zealand farmers can get their costs adjusted to living on world prices as they are now, then the only way to go is up,” he said optimistically.